Use case

Inventory funding: how to size it and what to watch.

Stock is bought months before it sells, and the supplier wants payment now.

✓ Checking what you qualify for does not affect your credit score.

What this looks like

Stock is bought months before it sells, and the supplier wants payment now.

Retailers, distributors and ecommerce businesses carry inventory at cost until it moves. A bulk-buy discount, a pre-season order or a sudden spike in demand can justify spending more than cash on hand.

How to size it

Work backward from expected sell-through. If an order will sell over ten weeks and returns a gross margin well above the cost of the advance, a request equal to the order is reasonable. If sell-through is uncertain, order less.

Illustrative arithmetic

A gift retailer depositing about $48,000 a month asks for $25,000 for holiday inventory. At a 1.25 factor the payback is $31,250, a cost of $6,250. Over roughly 6 months that is about $248 per business day, or close to 11% of monthly deposits.

Total payback: $31,250.
Cost: $6,250.
Payment: about $248 per business day, close to 11% of monthly deposits.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

Which structure tends to fit

A merchant cash advance fits a defined, fast-moving order. Revenue-based financing fits rolling inventory purchases where payment can follow sales.

Where it goes wrong

Over-ordering because the discount looks attractive
Slow-moving stock that does not generate cash to repay
Ignoring storage, insurance and shrinkage

Before you apply

Estimate sell-through weeks and margin
Compare the discount against the cost of the advance
Have supplier quotes with delivery dates

Typical starting points

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

Common questions

How much should I ask for?

Ask for the amount you can name in dollars and tie to a quote, invoice or schedule. A smaller, specific request is easier to approve and cheaper to repay.

Which structure is best?

It depends on whether the need is a one-time purchase or a recurring gap. See the comparison pages for the trade-offs.

How fast can I get it?

Decisions are often the same day on a complete file, and funding can follow the next business day.